Better use of land key to affordability in Vancouver
The last two weeks have been a bonanza for affordable housing junkies.They started with the Housing Central Conference, organized by the
B.C. Non-Profit Housing Association (BCNPHA), Co-op Housing Federation
of B.C. and Aboriginal Housing Management Association. It brought
together more than 1,300 participants from the non-profit and
cooperative housing sectors, and I was invited to deliver a version of a
recent SFU Affordable Housing Ideas presentation.
Many of the sessions focused on the need for new partnerships
between non-profit housing providers, developers and municipalities.
This message was reinforced by Municipal Affairs Minister Selina
Robinson and Mayor Gregor Robertson, who both addressed the delegates.
Kishone Roy, BCNPHA CEO, told reporters that while he was pleased to
see senior levels of government increasing funds to support affordable
housing, it is going to take years before new projects come on stream.
He, therefore, expects the current housing situation to probably get
worse before it gets better.
I was pleased to hear him applaud temporary modular housing as an
effective short-term solution. I did my 1971 university thesis on the
concept of relocatable modular housing, and some Courier readers may recall that Peter Ladner and I first proposed this idea to house the homeless during the 2008 municipal election.
In my conference presentation, I urged attendees to explore better
use of land. One idea was to redevelop well-located single-family lots
with small low-rise apartment buildings such as those built throughout
Vancouver in the 1950s and 1960s.
These simple buildings can be very cost-effective. They do not need
underground parking, and while some fire code relaxations may be
required, they can provide safe, decent and relatively affordable
accommodation.
Another idea was to consider other uses for back lanes. Now that
laneway housing has become accepted in many parts of the province,
perhaps it is time to also build townhouses and low-rise apartments
along lanes. Anyone familiar with English mews housing will know what I
mean. Moreover, the latest West End plan allows small infill apartments
along lanes.
A critical factor contributing to the high cost of housing is the
price of land. I therefore urged attendees to seek out free land. For
example, a 140-foot strip off the Langara Golf Course along Cambie
Street could accommodate a substantial non-profit and market housing.
The berm along West Sixth Avenue, built in the 1970s to shield False
Creek residents from railway noise along the now-abandoned railway
line, could offer another free land location, as might the top level of
underutilized parkades.
After the conference, the federal government announced its long-awaited Federal Housing Strategy
at joint events in Toronto and Vancouver. (Toronto got Trudeau; we got
Jean-Yves Duclos, the federal minister responsible for housing.)
In a Nov. 22 Courier story, Mike Howell summarized the $40-billion, 10-year, 100,000 unit program, which promises to reduce homelessness by 50 per cent.
While I'm pleased to see the federal government back in the housing
game, I’m sure I’m not the only one a bit sceptical when it comes to any
promises to end or reduce homelessness. But we can hope.
Following the federal government’s announcement, the City of
Vancouver released its 10-year housing strategy, which includes a broad
array of initiatives, including approval for 72,000 new homes around the
city. While I'm often critical of the city’s zoning, planning and
housing initiatives, this comprehensive program has potential to offer
many benefits.
I was particularly pleased with the proposal to transform
low-density, single-family neighbourhoods with 10,000 duplexes,
triplexes, townhouses, stacked rowhouses and low-rise apartments —
something many of us have been advocating for decades.
The city is also committed to speeding up the approval process and
eliminating community amenity contributions for rental housing —
something which has deterred some developers from building rental
projects.
Following the city’s announcement, former mayor and premier Mike
Harcourt noted that even in neighbourhoods such as Dunbar, West Point
Grey and Kerrisdale, where residents have traditionally defended
single-family zoning, there is now more openness to change than only a
few years ago.
I discovered this to be true last Thursday when Abundant Housing’s
Brendan Dawe and I were invited to speak on Changing Dunbar at the
Dunbar Residents’ Association annual general meeting. But that’s another
story for another day.
@michaelgeller
geller@sfu.ca
Link to Howell’s story:http://www.vancourier.com/news/40-billion-strategy-aims-to-reduce-homelessness-by-50-per-cent-1.23102458.

Monday, December 4, 2017

Before you read the story below, some background might be helpful.

I first met Frank O'Brien in the 1980s when I was president of UDI Pacific Region. In 1988 I was elected president of UDI Canada and I was allowed to engage a speech writer to assist me in preparing some of the many talks I would be expected to make. (Some Toronto developers thought I should be required to engage a speech writer.) I started to work with Frank and we have been in touch with one another ever since. Frank has often called me for background on stories and occasional fact checking, etc.

This story arose from a discussion Frank and I had a week or so ago when the federal housing strategy was being announced at the top of the Woodwards building. While there was much optimism about the fact the feds were back in the housing game, I did mention to Frank that I had recently been shocked at how much many developers, especially developers new to the city, were willing to pay for land. This was triggered in part by a potential new assignment for a property along the Cambie Corridor where I was being told $450 a foot buildable was a good price. Based on some proformas I prepared, I could not create a viable project at a sales price of $1400 a foot.

Many people seem willing to pay these prices and more, in some cases much more. Others are buying assignments at even higher prices. When I remarked to a realtor active in the Burnaby market that I was surprised to see pre-sales at higher prices than what completed product was selling for, he told me not to be surprised, adding that in some cases, new condos are like new cars. They depreciate when they are taken off the lot. He had seen a number of units selling for less than the pre-sale prices.

As it happen,s he was referring to units at SFU's UniverCity, not Metrotown. However, Frank says I specifically mentioned Metrotown to him. At any rate, I stand by the belief that pre-sale marketers are selling dreams, which are often years off in the future, with payment not required until some time in the future....while the final product does not always live up to the dream.

Pre-sale marketing really came into its own in the mid- 1980s. The concept of 'Priority Registration' and other finely tuned marketing techniques was created by Stan Kates, a brilliant marketing consultant. When I became president of UDI, I publicly expressed concern about how some very high pressure Toronto pre-sale programs were being orchestrated and suggested that if we weren't careful, pre-sales could become like high school chain letters. The people at the beginning might do well, but those buying in at the end could lose out.

So far, everyone who has been buying over the past few years has generally done well. However, as more and more Vancouver projects are starting with land costs over $450 a foot, which means they must sell at $1400 a foot or more in Vancouver, or land costs well in excess of $200 a foot in Burnaby which means they must sell for over $1000, I do worry about how long the ride will continue. We certainly can't build affordable housing at these land prices.

Here's Frank's story. I should add that while I was referring to price paid per square foot of buildable area, Frank sometimes refers to land prices per square foot of land area. Depending on the FSR permitted, this price will be reduced. I should also note that construction costs along the Cambie Corridor and elsewhere for concrete buildings is well in excess of the $350 a foot referenced in the article. In some cases, very high quality mid-rise buildings are approaching $440 a foot.

Vancouver developer and architect Michael Geller warns
that land has been selling at such high prices that some condo
developers – and new condo buyers – fear they won’t be able to profit on
the final product.
“I am seeing land sales now in excess of $500 a [square] foot buildable
in the city of Vancouver and these are not in any way special sites,”
Geller said.
“This is alarming. For a new 800-square-foot condo you are approaching $480,000, just for land.”
City land values are now worth more than the construction costs of a
residential tower, which Altus Group pegged at from $315 to $350 per
square foot in a 2017 survey.
When all soft costs, such as design and landscaping, city fees,
community amenity contributions, legal fees, marketing and commissions
are piled on, Geller said a developer would need to sell new condos at
well above $1,400 per square just to achieve bank financing, let alone a
profit.
There are now 30,000 strata units under construction and a total of
120,000 in various stages of the pipeline across Metro Vancouver,
according to industry estimates.
Yet prices for residential land – much of which already has a building on it – continue to soar.
For example, a Vancouver land assembly of four housing lots near
Langara Golf Course was sold a year ago for $12 million and then quickly
flipped for $13.2 million for a townhouse project.
That now looks like a bargain.
This month, HQ Commercial sold a 5,400 square foot residential lot in Vancouver’s Marpole area for $3.8 million, or $704 per square foot.
A 30,000-square foot strip mall on East Hastings, with just the
potential of residential development, was recently bought for $712 per
square foot.
“Currently the strongest multi-family market in the country, Vancouver
is witnessing an unwavering insatiable investor appetite,” said James Blair, vice-president, multi-family for JLL Canada. But Blair suggests there could be a limit, something that we have heard before.
“We foresee that costs per door in certain regions will continue to go
up, but not dramatically. We are already at very aggressive door costs.”
The question is whether the land costs that developers are willing to
pay will match what future condo buyers are capable of buying.
Some buyers of newly completed condos are already re-selling their
units for less than they paid at pre-sale during construction, Geller
said, citing a new concrete tower in Burnaby’s Metrotown area as an
example.
Meanwhile, the City of Vancouver is trying to put the
brakes on runaway land speculation in an effort to lower prices. Its
Housing Vancouver strategy, outlined November 28 and which may come into
force in 2018, is meant to “reduce over-inflated values for future
development.”
“The effects of speculation have caused significant consequences for
housing in Vancouver, and has hindered many of our attempts to build
affordable rental housing as the high cost of land make projects
unviable,” said Gil Kelley, Vancouver’s general manager, planning, urban design and sustainability.
Among its proposals, the city policy is considering making some
neighbourhoods “rental-only zones” to calm residential land speculation,
and said it is working with senior government in “implementing a
speculation or flipping tax” on residential land sales.

Saturday, December 2, 2017

This past summer, I was invited to speak at the MIABC AGM and barbq on the topic of Vancouver's last 100 years and the future of affordable housing. The presentation reviewed the history of CMHC housing programs and set out some housing affordability predictions for the future.

A week after losing one heritage home to demolition, West Vancouver council has saved one of the oldest houses in Ambleside and given it permanent protection.
Council voted unanimously Monday night to approve a heritage
revitalization agreement for the 1923 Rush House at 1195 12th St. in
exchange for allowing developer Michael Geller to move the historic home
30 feet to the east and build two new “cottages” of just under 2,000
square feet on the lot.
The home was built by Maj. Frederick Rush, a First World War veteran
who developed the lot into a 0.73-hectare farm following the war.
The project has the endorsement of the North Shore Heritage Preservation Society.
“It is a very attractive Craftsman-style house with many of the
classic architectural features of this architectural design,” society
president Peter Miller wrote in his letter to council on the matter.
“Its retention will serve to remind today’s residents of the rural
character of the West Vancouver community when it was built and stood
amongst field from which hay was harvested.”
Some neighbours, however, had some concerns. Particularly Holly Kemp
whose backyard could wind up in eyeshot of her new neighbours’ windows.
“Now we all want the Rush house to be saved. That’s not the
question. But it should not be at the expense and hardship of long-term
West Vancouver residents and neighbours like myself and my family.
Developers should not be allowed to infringe on my property rights,
devaluing my property and destroying my little piece of heaven,” Kemp
said at a public hearing Monday night.
Council’s reasons for supporting the project ranged from a love of
the home itself to a desire for the smaller infill units the project
would provide.
“I love the design. I think it replicates the neighbourhood form and
character,” said Coun. Nora Gambioli, adding that she has faith in
Geller to address neighbours’ concerns. “Our job is do what’s best for
the community as a whole and what’s best for the community as a whole is
to save this heritage property.”
Coun. Mary-Ann Booth threw her vote behind the project largely because of the two cottages being added to the lot.
“I’ve said it before. I’m not interested in supporting any more
single-family subdivisions because that’s not what 80 to 90 per cent of
the community wants,” she said. “No locals can afford $5 million to $6
million houses here anymore.”
Coun. Christine Cassidy said she shared some of the neighbours concerns but supported the project for the home’s sake.“It is a house which grabs your heart and I definitely do want to
see it preserved. I do think it will be a lovely project when it has
finished,” she said. Mayor Michael Smith also voted in favour but not before sharing his
concern that Geller’s new units were perhaps too big and that there
wasn’t any rental accommodation in the plan.

Maj. Frederick Rush is pictured in a photo taken during or slightly before the First World War. photo SUPPLIED Ian Macdonald

“Going forward I would like to see staff be a little bit more
targeting to the kind of housing that we need, which is the entry-level,
ground-level, two-bedroom-and-den accommodation for a young family or
for someone that’s selling,” he said.

Last week, the district confirmed they were unable to strike a
heritage revitalization agreement to save the 1919 McClelland House in
Altamont.The owners said the district approached them too late in the process
and they were already committed to building a new home on the land.

NOTE: Following the Council approval I met with Holly Kemp and her family and while I could not agree to all their demands, I was able to address most of them, including removal of balconies overlooking the lane, removal of some windows, and adding stain glass to others, and increasing the setback to add a row of trees along the lane.

Over the past two weeks I have done three media interviews on whether it is appropriate to have separate entrances for market and non-market housing units being built on one site. While to my mind it is not only appropriate and logical, but also necessary to have separate entrances since the two completed buildings will ultimately be owned by two different entities, some housing activists want to draw parallels between what is happening in Vancouver, and what was happening in New York.

There, the term 'poor doors' was invented to describe a situation where some developers were reluctantly required to build developments combining market condominiums and non-market housing for blacks and other disadvantaged groups. The condominiums had their entrance off the street, while the social housing had its entrance off the back lane.

Vancouver has a longstanding history of successfully mixing market and non-market units dating back to 1970s when the south shore False Creek development got underway. Since then market and non-market housing has been juxtaposed in Coal Harbour, elsewhere around False Creek, and most famously in the Woodwards development.

In some developments, affordable housing units are sprinkled through a market development. However, the owner/manager of the social housing units must pay the strata fees as condo residents, which may exceed the rents being charged.

WATCH: A proposed condo
development for Vancouver’s West End is creating controversy with
divisions between the social housing component and everyone else. Grace
Ke has the story.

A proposed condo building in Vancouver’s West End has drawn
criticism for the division it appears to be creating between the social
housing component of the building and other residents.
The
proposed 30-storey building on the corner of Burnaby and Thurlow Streets
would have 82 market residential units and 39 social housing units. It
would also have an entrance for condo owners and an entrance for social
housing, which have been referred to as “poor doors.”
In addition to separate entrances, it will also have separate playgrounds.
Another West End project faced similar criticism back in 2015. The
19-storey highrise planned to have condo owners access the building
from Jervis St. while social housing residents would use a Davie St.
entrance.WATCH: Condo developer under fire for so-called ‘poor doors’

“We’re creating in the infrastructure a separation between the upper
class and lower class, so to speak,” community activist Randy Helten
said at the time. “It parallels other stuff that’s going on in society,
like with health care and the education system and so on.” The city says from a legal and management perspective the separation at the Thurlow Street development makes sense.
Vancouver architect and developer Michael Geller agrees.
“What we have here is a situation where a developer is agreeing to
build some affordable housing units in return for approval to build the
condominium units,” Geller said.
“So at the end of day, one
portion of the building will be condominiums, owned, managed and, in
some instances, the strata fees may even be higher than the rents in the
other side of the building that likely will be managed by a non-profit
or perhaps even B.C. Housing.”
Geller notes such developments are
not new to Vancouver. The Woodwards building has one market and two
social housing components each with its own entrances and amenities.
“What
we’re creating are really two separate buildings with separate
ownership and separate management,” he said. “At the end of the day,
it’s no different than any two buildings that are side by side.”– With files from Grace Ke